We asked Pieter Post, Principal Consultant Retail at Mirabeau, and Quido Corver, Manager of Digital Strategy Consulting at Cognizant, to explore the complex issue of fulfillment, and explain why being digital is the key to future success. "Customers are in search of a seamless experience, from in-store purchase to online order to delivery to returns," Pieter begins. "And if they don't get it from you, they'll get it somewhere else. Just ask Toys 'R' Us."
Of course, that includes a flawless ordering process and on-time delivery. But those are just the basics. Today's shoppers expect a personal experience that leads them directly to the desired outcome. "Shoppers still want the experience to be incredibly personal. Think about how people shopped 40 or 50 years ago," Quido says. "Your local grocer knew your name, and knew your preferences. He/she might even set aside your favorite items if they were running low. Today, we can use data and technology to mirror these personal experiences and put retailers at the head of the pack."
Tip 1: Ask your customers
Yep, you guessed it. Like every other article in The Click series, our advice begins with an emphasis on your customers. It should be obvious by now: you can't provide the most personal experiences until you know what your customers personally want. Pieter: "whatever efforts you're making to improve fulfillment, you'll be lost unless you know what your customers specifically need. Dig deeply into your processes and data, collect information that provides insight into the stickiest parts of fulfillment from your customers' perspective, and then address those needs first. Otherwise, your efforts may be in vain."
Pieter stresses that what works for your competitors might not work for you, and your particular retail niche will play major role. "That's especially true if your specialty is differentiation. If you're selling your brand based on being different, your fulfillment decisions should likely be different, too."
Tip 2: Fulfill in-store first
IIt’s true that the majority of fulfillment issues nowadays are related to online shopping, shipment and returns. But you may be surprised to learn that some of the most successful retailers are seeing great fulfillment improvements in-store, as well. Fashion retailer Zara was a pioneer in using technology, including PDAs (personal digital assistants) to collect data on product preferences from customers in real time. Today, Zara can hone into that data with AI algorithms to make the supply chain more efficient and responsive. But instead of relying only on their factories in Asia, they’ve also established factories in Europe to produce – and quickly ship – their most popular items. This saves precious time and ensures their shelves are always stocked.
Other retail giants are jumping on the digital bandwagon to improve the in-store experience. Rebekka Minkoff is turning the fitting room into a selling room with digital technology. The GAP is using AR to make trying on clothes a virtual pleasure. "Examples like these show that there are plenty of opportunities to use digital to improve the in-person shopping experience," Pieter explains. "Especially when it comes to stock management and size selection."
Tip 3: Bring service to your supply chain
Let's finally get to the heart of matter: fulfilling online orders. Even as automation and robotics usher in new efficiencies, supply chains will gain a human face as they take a leading role in customer management. So where do retailers struggle most? As it often does, size matters most here. "Major online retailers are working on ways to improve the speed and accuracy of their delivery," explains Quido. "I'm thinking here of Dutch online giant Bol.com. They built an innovative fulfillment center, complete with its own branch of the Dutch post office. Because they know that better and faster distribution, and lower shipping costs, are the keys to happy customers."
But what about retailers who don't have the capacity for an elaborate fulfillment center or want dramatically speed up time-to-market? "There are plenty of options for them too," Pieter says. "Retailers can link up with comparable and complementary services and become part of a fulfillment platform, leveraging the reach and reputation of bigger players." Think here of the French retailer Casino. They worked with retail-tech fulfillment company Ocado for their ecommerce expansion. Burberry and Chanel have started working together with Farfetch for the same reason. A more local collaboration between retailers with the aim of supply chain synergy is between PicNic and Wehkamp, "When companies work together to develop technological solutions to fulfillment, everyone wins," continues Pieter. "Customers get the speed and satisfaction they expect, and retailers share costs and risks."
Tip 4: Get creative and go farther
Unfortunately, speedy home delivery is only the beginning of the story. Retailers who want to stay relevant for their busy customers need to get even more personal. "Busy families who aren't often at home still want convenient solutions for shipping," Quido continues. "We're seeing the increasing success of concepts like Click & Collect. Up to 62% of shoppers are now using this method to retrieve their goods, and that number climbs every year."
We're also seeing tremendous growth in Click & Commute strategies - strategically placing pick-up points along shoppers' commuter routes, such as train and metro stations. The more convenient that customer pick-up is, the more loyal customers will be to that retailer.
But getting personal goes even further. Volvo now offers delivery service that allows online orders to be delivered directly to the trunk of any Volvo. And Jeff Bezos is trying out an instant delivery service for Amazon: pick-up within three minutes.
"The idea here is that retailers are looking at the specific needs of their customers, and testing ways to deliver on those needs - and deliver smarter than anyone else," Pieter explains. "While retailers might not be able to compete with a three-minute turnaround, it's clear that technology offers a lot of ways to improve current offerings."
Tip 5: Turn the tide on returns
OK, we know what you're thinking. Even if you do everything in your power to ensure seamless delivery, that still doesn't address the elephant in the room: returns. "Shoppers have turned their living rooms into dressing rooms," Quido admits. "They order multiple sizes and try them on in their homes, and return anything they don't like or doesn't fit." That's why fashion has the highest return rates in retail - around 40%. And with each return costing retailers an average of €17, returned items are costing retailers an estimated €8.5 billion per year, according to Fits.me.
It may seem like shoppers are happy with this try-and-return method, but studies show that 80% of shoppers would actually prefer a 'first-time right' shopping experience. So offering outstanding service when it comes to sizing is a crucial differentiator. As mentioned earlier, digital solutions that improve the fitting process can help. "One way to reduce returns is to use historical data to optimize product descriptions and sizing communications," Quido says. "But retailers can also take efforts further with 3D scanners and algorithms that ensure a more accurate fit and fewer returns. It's reported that Fitcode has increased conversions in the jeans market by up to 400%."
How else can retailers stop this resource bleed? Nick Robertson, former CEO of ASOS, says even a 1% drop in return rates could mean as much as an additional $16 million in income. He told snap36 that achieving that drop could be as simple as improving product photography and customer service, and including customer product reviews. The bottom line: improving customer expectations is the key to slowing the return tidal wave.
Tip 6: Go from creepy to caringMany retailers are exploring the possibilities of automated replenishment for goods that are used regularly and repeatedly, like groceries, diapers, fresh goods and household items. With examples that range from the simple to the sublime, retailers are finding ways to put items in the shopping cart before a customer even knows it's needed. But be careful to check in with your customers on this one. At least 33% of shoppers say that automated replenishment is 'creepy'. "But I wouldn't be surprised if, like so many other technologies, shoppers will get used to these modern conveniences and will look forward to using them, sooner than we think. What's considered creepy today might be the ultimate sign of care tomorrow."
The Mirabeau differencePieter and Quido cite some of the ways that Mirabeau and Cognizant team up to help retailers improve fulfillment. "We've developed a reference architecture that provides tooling for detailed analysis. We always start by analyzing the complete fulfillment life cycle to gain insight into customers' specific wants and needs," Pieter says. Based on the retailer's key requirements - and components that differentiate or provide competitive edge - we reassess the company's (digital) business model and explore ways to optimize fulfillment and reduce operational costs. "The answer lies often in cross-channel operations, in particular where engagement meets fulfillment, and beyond. Customers aren't thinking in silos. They're thinking about a flawless flow through a retail organization to get that most wanted product in the blink of an eye."
Those may be high expectations, but there are feasible digital solutions that can help. "We're in the middle of an exciting project with a major athletic retailer," Quido shares. "The idea is to use some of the key attributes of blockchain - such as securing sensitive information, trust and transparency - to manage inventory at both mono-branded and multi-branded stores. If a shopper can't find the product he/she wants in a store, the blockchain will facilitate an encrypted search to locate it in a store nearby. A 'runner' from one of the stores can pick it up there and deliver it to the customer. Here's the extra benefit: this particular client also struggles with counterfeiting. Blockchain can also be used to tackle this problem by ensuring that every item shipped is an official, registered product. These are just some of the ways we're helping our clients prepare to dominate digitally in the future."
The issue of fulfillment doesn't have a 'one and done' solution, but integration is a key element. Retailers must constantly push the boundaries and find new and better ways to deliver an excellent customer experience. When loyalty and repeat business is on the line, every seamless second counts.
Our top tip
Seamless experiences create satisfied shoppers. Do whatever it takes to get your product into your customers' hands, where and when they want it.